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Questions and Answers
Which term refers to a reduction or fall in the value of an asset due to the passage of time?
What type of costs vary in total with the quantity of output or activity level?
Which term refers to a summation of all costs related to a product or service throughout its lifespan?
What are payments made at the beginning of each period called?
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Which term is used for a series of regular payments made at the end of each period?
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What type of products have an income elasticity of demand greater than one?
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Study Notes
Financial Concepts
- Contingent annuity: depends on certain events occurring
- Sunk cost: an event that occurred in the past, irrelevant to future estimates of costs and revenues
Cost Types
- Variable cost: associated with an operation, varies in total with output or activity level
- Depreciation: reduction in asset value over time due to usage
Annuities
- Annuity: series of periodic payments, equal amounts, equal intervals
- Annuity certain: series of regular payments made at the end of each period
- Annuity due: payments made at the beginning of each period
- General annuity: payment interval doesn't coincide with interest compounding period
Economic Concepts
- Incremental cost: additional cost or revenue from increasing output by one or more units
- Luxury: products with income elasticity of demand greater than one
- Overhead: cost of the best rejected opportunity, often hidden or implied
- Supply: amount of goods or products available for sale
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Description
Test your knowledge of financial accounting terms with this quiz covering concepts such as contingent annuity, sunk cost, variable costs, depreciation, and more. Identify terms related to costs, revenues, asset value, and financial analysis.
